Netflix Soars 15%: Q4 Rev, EPS Beat, Q1 EPS View Higher as Well

By Tiernan Ray

Netflix (NFLX) this afternoon reportedQ4 revenue and profit per share that topped analysts’ expectations, and forecast this quarter’s profit higher as well.

Revenue in the three months ended in December rose to $1.18 billion, yielding EPS of 79 cents.

Analysts had been modeling $1.17 billion and 65 cents per share.

Netflix ended the quarter 44 million members, it said, after adding 2.33 milliondomestic subscribers in the quarter, on a net basis. Total domestic streaming paying members were 31.7 million, it said, and 33.4 million domestic streaming subs in total.

The company’s international streaming service added 1.74 million subscribers, for a total of 10.93 million, 9.72 million of whom were paying.

The company called its growth in domestic streaming subs higher than the prior year’s growth, and said overall growth was “healthy.”

The company’s “contribution” margin for its domestic business was 23.4%, and said “Our strong results indicate that a 30% quarterly contribution margin may start being achievable in 2015.”

“At 30%, we’d re-evaluate the right margin growth target, given conditions at that time. To the extent our contribution margin climbs above 30%, it will get harder to keep it growing at 400 basis points per year.”

For the current quarter, the company sees EPS of 78 cents, above the consensus 76 cents.

That outlook assumes the company will see domestic streaming subscribers rise to 35.67 million. International subscribers are expected to rise to 12.5 million in total this quarter. Total members at the end of this quarter are expected to be 48 million.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.